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Can American And Its Pilots Avert A Collision?

January 20, 1991

Cover Story

CAN AMERICAN AND ITS PILOTS AVERT A COLLISION?

Despite his tough-guy reputation, AMR Corp. Chairman Robert L. Crandall is proud of his efforts to smooth employee relations. He encourages workers to speak out at annual conferences with top executives. He chats with them as he travels across the empire of American Airlines Inc. Above all, he has provided them with more jobs and greater opportunities. The payoff has been nearly a decade of remarkable labor peace.

But with demands for higher wages threatening his drive for global expansion, Crandall is taking off the gloves. The result: a bitter contract dispute with the union representing American's 8,800 pilots. The level of animosity became painfully public during the Christmas holidays, when American charged some pilots and the union with an illegal sick-out that caused the cancellation of 800 flights.

The airline apologized for the cancellations in full-page newspaper ads. Then, it announced the cutback of 11% of its flights by February. The Allied Pilots Assn. (APA) denied orchestrating a slowdown and shot back with charges of company safety violations.

'DEAD MEAT.' The two sides have been negotiating for nearly 16 months. Even if there's a settlement without a strike, some wonder how quickly the scars will heal. Acknowledging the need for labor's support, Robert W. Baker, American's executive vice-president for operations, says: "If those people [the unions] don't support the company's objectives, we are dead meat." Until now, American has wooed pilots by promising growth and delivering it. That has meant more jobs and faster promotion. After negotiating a lower pay scale for new hires in 1983, American added nearly 300 planes and 5,000 new pilots. In this round of talks, Crandall is again promising growth. He says he'll invest some $20 billion in American over the next five years.

This time, though, the old arguments don't wash. More pilots are on the lower scale than on the higher one, and they insist the company can afford both growth and fatter pay raises. They point to rival Delta Air Lines Inc., which signed an industry-leading pay pact with pilots last summer.

SLOW MOTION. Although it's Crandall's turn in the hot seat, United Airlines Inc. Chairman Stephen M. Wolf can hardly gloat. Wolf is negotiating contracts not only with his pilots but also with mechanics and flight attendants. Employee relations have been shaky at United since a bitter pilots' strike in 1985. Wolf, like Crandall, says growth would be hampered by matching Delta's pay rates. Union leaders hint that United pilots may start "flying by the book" and slowing operations if talks don't progress soon.

Back at American, union officials say the next few weeks could determine whether there will be a compromise or a strike. "There's definitely room to maneuver," says a union board member. The talks continue.Wendy Zellner in Dallas, with Kevin Kelly in Chicago and Walecia Konrad in Atlanta